US small trucking companies need federal support: Transfix

US small trucking companies need federal support: Transfix

Small US trucking companies deserve comprehensive support to continue safely and effectively doing their jobs, according to Transfix CEO Lily Shen. Photo credit: Shutterstock.com.

Small over-the-road carriers, which make up more than 90 percent of the US trucking industry, need the same level of federal backing that airlines and railroads have received as they keep US domestic supply lines intact during the COVID-19 pandemic.

Freight brokers, especially digitally native ones that have built their platforms around better use of data, can play a critical role in providing those small carriers with more opportunities to move loads during the disruption caused by the pandemic. But those technology-enhanced services can’t alone account for the sacrifice independent drivers and small fleets have made during the ongoing crisis.

While every industry in the US has been clearly affected by the coronavirus, what isn’t as clear is the proper response. There still exists a significant variance in the severity and timing of COVID-19’s economic impact on individual sectors, and the one-size-fits-all approach of the CARES Act simply won’t work for complex industries. The sheer complexity of the US economy necessitates unique and custom solutions for small businesses. The domestic supply chain is a perfect example of a sector that is in dire need of fortification, and it begins with our carriers. 

Carriers rose to the occasion to ensure the timely movement of essential goods at the beginning of the crisis. As hours of service (HOS) restrictions were lifted, carriers were working virtually around the clock to handle a historic influx of freight. Transfix’s data science team tracked a freight volume increase of 207 percent month over month in March, from the essential shippers we work with on a regular basis, with the spike peaking on the 23rd of the month. Essential shipper volumes ramped up in three weeks, but plummeted back to pre-COVID-19 levels in just a week’s time. Additionally, non-essential shipping volume tracked approached zero between early March and early April. 

Small and medium-sized carriers operate with razor-thin margins in ideal circumstances and represent about 90 percent of the US trucking landscape. Even historically low fuel prices won’t be enough to keep these vital cogs in the nation’s supply chain afloat if manufacturing, retail, and other non-essential industries don’t return to pre-outbreak production levels. 

Maximizing efficiency is economic ‘life-or-death’ 

Maximizing efficiency is quickly becoming an economic life-or-death proposition for the vast majority of carriers in the US. Digital freight brokers are currently offering vital services to carriers during this unprecedented time, ensuring they can acquire loads when and where they need them. Backhauls, in particular, have taken on increased importance, with carriers eager to keep their trucks full and their cash flow positive. We’re currently experiencing historic highs in our online bookings, which indicates that carriers are jumping at the chance to secure shipments days, and in some cases weeks, ahead of time. 

The seesawing of leverage between carriers and shippers has lessened in recent years, as digital logistics companies have introduced more reliable metrics and information. Reliable data has helped digital brokers build trust with both carriers and shippers. Both sides of the market would love to run their businesses more efficiently, but major macro economical headwinds have forced even the most efficient carriers into a corner. That’s why it’s important that we, as an industry, advocate strongly for federal intervention. 

Both the airline and railroad industries have received billions of dollars in federal aid in the last two months. The same kind of assurances need to be made to small and mid-sized carriers, because without them, our national economic engine would seize overnight. Grocery store shelves would go empty within three days. Hospitals, clinics, and pharmacies would run out of PPE and medical supplies within 36 hours. The stakes are too high to place such crushing economic pressure on hard-working, self-sacrificing carriers who are currently risking their health by being out on the road and at facilities. 

At this time, leaders within our community need to urge our elected officials to properly value the drivers of America by providing an economic backstop so that they don’t have to battle about insolvency while simultaneously delivering life-saving supplies coast to coast. As true heroes, in the same vein as the doctors, nurses, and first responders on the frontlines, carriers deserve the immediate and comprehensive support needed to continue safely and effectively doing their jobs. 

Lily Shen is president and CEO of digital freight marketplace Transfix.